Problem 1: A company's account balances at December 31, 2007 for Accounts Receivable and the related Allowance for Doubtful Accounts are $460,000 debit and $700 credit, respectively. From an aging of accounts receivable, it is estimated that $12,500 of the December 31 receivables will be uncollectible. The necessary adjusting entry would include a credit to the allowance account for:
a. $12,500.
b. $13,200.
c. $11,800.
d. $700.
e. None of the above
f. Answer cannot be determined from the information provided
Problem 2: Gross billings for merchandise sold by a company to its customers last year amounted to $15,720,000; sales returns and allowances were $370,000, sales discounts were $175,000, and freight-out was $140,000. Net sales last year for the company were:
a. $15,720,000.
b. $15,350,000.
c. $15,175,000.
d. $15,035,000.
e. None of the above
f. Answer cannot be determined from the information provided
Problem 3: A company has the following items: write-down of inventories, $120,000; loss on disposal of Sports Division, $185,000; and loss due to strike, $113,000. Ignoring income taxes, what total amount should the company report as extraordinary losses?
a. $ -0-.
b. $185,000.
c. $233,000.
d. $298,000.
e. None of the above
f. Answer cannot be determined from the information provided
Problem 4. A company has the following items: common stock, $720,000; treasury stock, $85,000; deferred taxes, $100,000 and retained earnings, $363,000. What total amount should the company report as stockholders' equity?
a. $898,000.
b. $998,000.
c. $1,098,000.
d. $1,198,000.
e. None of the above
f. Answer cannot be determined from the information provided
Problem 5: A corporation reports:
Cash provided by operating activities $250,000
Cash used by investing activities 110,000
Cash provided by financing activities 140,000
Beginning cash balance 70,000
What is the corporation's ending cash balance?
a. $280,000.
b. $350,000.
c. $500,000.
d. $570,000.
e. None of the above
f. Answer cannot be determined from the information provided
Problem 6: A company will invest $300,000 today. The investment will earn 6% for 5 years, with no funds withdrawn. In 5 years, the amount in the investment fund is:
a. $300,000.
b. $390,000.
c. $401,469.
d. $402,087.
e. None of the above
f. Answer cannot be determined from the information provided
Problem 7: A corporation will invest $25,000 every January 1st for the next six years (2006 - 2011). If it will earn 12% on the investment, what amount will be in the investment fund on December 31, 2011?
a. $102,785.
b. $115,120.
c. $202,880.
d. $227,225.
e. None of the above
f. Answer cannot be determined from the information provided
Problem 8: What amount should be recorded as the cost of a machine purchased December 31, 2006, which is to be financed by making 8 annual payments of $6,000 each beginning December 31, 2007 if the applicable interest rate is 8%?
a. $42,000
b. $37,481
c. $63,820
d. $34,480
e. None of the above
f. Answer cannot be determined from the information provided
Problem 9: A company uses the percentage-of-completion method of accounting. In 2007, the company began work on a contract it had received which provided for a contract price of $15,000,000. Other details follow:
2007
Costs incurred during the year $7,200,000
Estimated costs to complete as of December 31 4,800,000
Billings during the year 6,600,000
Collections during the year 3,900,000
What should be the gross profit recognized in 2007?
a. $600,000
b. $7,800,000
c. $1,800,000
d. $3,000,000
e. None of the above
f. Answer cannot be determined from the information provided
Problem 10: A company began work in 2007 on contract #3814, which provided for a contract price of $7,200,000. Other details follow:
2007 2008
Costs incurred during the year $1,200,000 $3,675,000
Estimated costs to complete,
as of December 31 3,600,000 0
Billings during the year 1,350,000 5,400,000
Collections during the year 900,000 5,850,000
Assume that the company uses the completed-contract method of accounting. The portion of the total gross profit to be recognized as income in 2008 is:
a. $900,000.
b. $1,725,000.
c. $2,325,000.
d. $7,200,000.
e. None of the above
f. Answer cannot be determined from the information provided
Problem 11: A company sold some of its plant assets during 2008. The original cost of the plant assets was $750,000 and the accumulated depreciation at the date of sale was $700,000. The proceeds from the sale of the plant assets were $105,000. The information concerning the sale of the plant assets should be shown on the company's statement of cash flows (indirect method) for the year ended December 31, 2008, as a(n):
a. subtraction from net income of $55,000 and a $55,000 increase in cash flows from financing activities.
b. addition to net income of $55,000 and a $105,000 decrease in cash flows from investing activities.
c. subtraction from net income of $55,000 and a $105,000 increase in cash flows from investing activities.
d. addition of $105,000 to net income.
e. none of the above
f. answer cannot be determined from the information provided